CHICAGO - United Airlines parent UAL Corp. expects to leave bankruptcy protection as early as the fourth quarter, a company lawyer told a federal bankruptcy judge yesterday.
James Sprayregen told Judge Eugene Wedoff that UAL management has begun meeting with creditors and other interested parties to outline a preliminary plan for reorganizing United, the world's second-largest airline behind AMR Corp.'s American Airlines.
As a result, UAL could leave Chapter 11 before the end of the year or in the first quarter of next year, he said. The company said in December, when it filed for bankruptcy, that it might take 18 months to reorganize.
Still, the company is leaving its options open. "We're not going to come out a half-fixed company or a partially fixed company," said United spokesman Jeff Green.
UAL posted a first-quarter loss of $1.3 billion and is expected to lose money for the year, according to analysts surveyed by Thomson Financial.
Chief Executive Officer Glenn Tilton said last month that UAL is seeking a $1.8 billion federal loan guarantee that would help attract lenders and finance the restructuring.
Top United officials, including Tilton, have said over the past month that UAL might emerge from bankruptcy ahead of schedule.
UAL has yet to present a recovery plan, which must be approved by most creditors and the judge before the company can emerge from bankruptcy protection.
The carrier has renegotiated its union contracts, lowering labor expenses by $2.56 billion annually, and is renegotiating aircraft lease and debt expenses to cut $700 million annually.
UAL's shares gained 20 cents, to 90 cents, in over-the-counter trading yesterday.
Also yesterday, Wedoff dismissed a lawsuit UAL filed against the city of Chicago seeking to avoid being evicted for nonpayment of interest on airport facility bonds.
Wedoff told the airline that the city was not planning to throw United out of O'Hare International Airport, so there was no "actual controversy" and the city has said it is willing to negotiate the dispute. United is the largest carrier at O'Hare.
The airline has missed interest payments on $1.7 billion in municipal bonds used to finance improvements at O'Hare and other airports. UAL has argued that the interest on the debt doesn't have to be paid while the airline is under bankruptcy protection.
